April 2013 ~ Managing a Car Loan

Monday, April 29, 2013

Can You Borrow Less Than $5,000 From a Bank for an Auto Loan?

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Having a good credit score, a high paying job and no debt could still mean a rejection for a $5,000 auto loan. Not because you lack the credit requirements, but it might be too low of an amount for some lenders to bother handling. Fortunately, if you qualify for an auto loan, but do not need more than a few thousand dollars, you can go for a personal loan or other lines of credit.

As of the date of publication, most lenders require borrowers to take out at least $5,000 for an auto loan. Anything below this amount may not be profitable enough or too much trouble for the bank. However, the minimum loan amount requirement varies from lender to lender, so you may have to search around to find a bank willing to issue a $5,000 auto loan.

If you are looking to refinance an older car loan, most lenders won't bother with anything less than $7,500, according to CreditProvider.com. Like with an original auto loan, there is a breaking point where it is too expensive and risky to maintain such a small account even when you are creditworthy.

When creditors reject your application due to not meeting the minimum loan amount, you could go with a personal loan. You can use personal loans for just about any expense, such as remodeling a home or buying a car. Lenders usually charge more in interest for an unsecured personal loan because they can only go after the borrower in court in case of default. A secured personal loan, which requires you to put collateral, garners a lower interest rate.

Shop around for the lowest possible rate on whatever loan you choose. At $5,000, a home equity line of credit or loan -- a loan secured by your home -- tends to have an extremely low interest rate because of the security. Credit cards are an option if the dealer agrees to put the entire purchase on credit -- many dealers refuse credit cards because of the processing fees. You are also likely to earn cash back on the purchase if your credit card provider offers a cash rewards program. Also, the dealer might offer in-house financing, but expect higher rates than a loan from a bank because some dealers do not perform a credit check.

Help With Auto Credit

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Buying a new or used car can provide the transportation you need to commute to work or school. But if you don't have cash to purchase a car outright, you'll need financing to acquire a car. Before meeting with a salesperson, explore ways to secure auto credit with a bank.

Banks and finance companies work with all types of car buyers. With this said, having bad credit or a low credit score won't necessarily disqualify you for financing, but you may pay a higher interest rate on the auto loan, which can increase the monthly car note. When applying for credit, you're likely concerned with keeping payments affordable. Keeping a high credit score, such as 700 plus, is key to qualifying for the best financing rate and keeping payments manageable. A timely payment record and keeping consumer debt to a minimum helps improve credit.

The average car buyer tends to choose a five-year loan term to keep payments affordable. But if your finances allow a higher monthly payment, consider financing the car for three or four years. Decreasing the term on the auto loan can help you secure a cheaper finance rate, and you'll pay less interest over the duration of the auto loan.

Reduce the amount you finance with the bank and subsequently reduce your monthly payment with a down payment. Many dealerships offer "sign and drive" deals that allow buyers to purchase cars with no money down. Although not required, a down payment can help you negotiate a cheaper interest rate on the automobile; and if you've had a bad credit history, a down payment can also increase your odds of getting credit with the bank or finance company. Aim for 10 to 50 percent of the purchase price.

Getting auto credit after a bankruptcy or with no prior credit history can prove tricky. Banks working with people in your situation will issue a higher interest rate. Using a co-signer on the auto loan can help you acquire credit at a more reasonable interest rate. With co-signers, banks factor in both credit scores and they take the median score to determine whether you qualify and the interest rate on the car loan. For example, if you have a score of 580 and your co-signer has an 810 credit score, the median score used for the auto loan 695.

What Are the Charges of Driving With a Suspended License in Colorado?

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To drive on any public road in Colorado, a driver must possess a valid driver's license. A driver may have his license suspended for a variety of reasons, at which time he temporarily loses his privileges to operate a motor vehicle. If a driver is caught driving on a public road after his license is under suspension, he could face misdemeanor charges, depending upon the circumstances in which the license was suspended.

To prove that a Colorado driver was operating a motorized vehicle after her driver's license was suspended, police must prove beyond a reasonable doubt that the driver was operating the vehicle in question. The court must also prove that the driver received notification that her license was revoked, either at a prior court appearance or through certified mail. Prosecution must also prove that the defendant is actually the driver named on the suspended driver's list, and not merely someone with the same name.

If a driver's license is suspended for any reason other than drug- or alcohol-related reasons and the driver is found guilty of driving under a suspended license, he faces misdemeanor charges. The driver may face up to $500 in fines and six months in jail for the violation. If caught driving with a suspended license for a second time within five years of the first violation, the driver loses his driving privileges in Colorado for three years.

If the driver's license was suspended because of pending charges or a conviction for driving under the influence, driving while impaired, habitual drug use or underage drinking and driving, the driver faces stiffer penalties. While still a misdemeanor charge, the minimum fine is $500 but cannot exceed $1,000. If convicted, the driver also must serve at least 30 days, but no more than one year, in prison. Subsequent violations earn two-year jail sentences and fines of up to $3,000.

Drivers may lose their licenses for several reasons in Colorado. If a driver's license accumulates too many points assessed against it for moving violations -- which vary by license type -- a driver may temporarily lose her license. Drivers who refuse roadside sobriety tests immediately lose their licenses for a year, and drivers convicted of driving under the influence of alcohol and drugs face suspension. Additionally, those found guilty of purchasing liquor for minors, even if no motor vehicle violations occur, may face a suspended license. The state may also suspend a license if a driver is found guilty of nonpayment of child support.

Is Buying a Car With Cash a Smart Decision?

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Most car buyers can't afford to buy a car outright with cash, and they're forced to finance the vehicle. But if you have the cash in your personal savings, weigh the benefits of buying a car with your own money, and decide if this is the right decision for you.

The ability to buy a vehicle often depends on your credit history and whether you can qualify for a loan or financing. But if using cash for your next vehicle purchase, qualifying for financing isn't a concern, and you can get the car with no credit history or with bad credit. Auto dealerships only check credit when a buyer plans to use a lender to finance the car. Credit history not only determines approval but also determines the interest rate on the vehicle loan.

Financing a vehicle purchase generally involves paying interest or financing fees unless you qualify for zero percent interest. Financing costs increase the final loan balance and plays a huge role in the monthly payment. Borrowers who qualify for a low interest rate pay less each month than someone paying a higher interest rate. If paying cash for a car, financing costs are not an issue, and you'll ultimately save money on the vehicle.

Financial situations can change rapidly -- layoffs, job loss, illness and divorce can affect your ability to afford your auto loan payment after acquiring financing. Buyers who pay cash for their vehicles own the cars outright. Therefore, if they encounter unexpected financial hardship, they don't have to worry about a car payment or the risk of repossession due to the inability to keep up with their payments.

Because cars depreciate fast, the chance of becoming upside-down on a vehicle loan is high. This refers to owing more than the vehicle's worth. Borrowers in this situation may experience difficulty when trying to sell the car or deal with negative equity when trading in a car. But if paying cash for your car, you won't run into this problem. You can sell the car or trade it in without worrying about being upside down.

Best Ways to Lease a Car

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Car leases typically involve short-term loans with an average duration of two to four years. When leasing a car, avoid rushing the financing process in order to quickly get behind the wheel of an amazing new car. Think objectively and approach the lease by asking questions and negotiating. Do not mention that you are interested in leasing until after you discuss the sales price.

Start by understanding basic finance terminology. For example, APR refers to the annual percentage rate, or interest, your lease will maintain. Even though car dealerships advertise low leasing rates (like a brand new BMW for $300/month), your credit score plays a major role in your ability to get a great lease. Before you consider leasing, clean up your credit report by working with creditors to charge off or settle accounts. Realize that most gimmicks are based on an extremely limited quantity of vehicles. As leases usually involve new car models, it is vital that you detach emotional ties and approach the lease as if you were purchasing a house. Read contracts (especially the fine print). Avoid paying a large down payment. Negotiate for higher mileage limits so that you can drive 14,000 miles a year (instead of the typical 10,000 mile lease limit) without being penalized. Another important factor in getting the best lease is to negotiate the selling price below the MSRP, or manufacturer's suggested retail price.

In leasing a car at a dealership, you negotiate with the dealer. But often your lease is actually with an outside lender. If you cannot get preapproved financing, then work with the dealer to lease a car with a low- or no-security deposit, dealer fees and bank fees. Do not simply discuss expected monthly payments. Also ask if the lease includes maintenance plans, such as for oil changes and tire rotations. Evaluate the lease's required insurance coverage so that you are not faced with high premiums since cars depreciate, not appreciate, in value.

A great way to lease a car involves obtaining preapproved financing. Contact a legitimate online lender or a local credit union to find a reasonable loan without excessive fees. Upon receiving financing, you should shop around and evaluate different dealer prices. Never accept a dealer's offer without counteroffering. Unless you are seeking a rare or limited edition car, then you should have a few sources to consider, such as dealerships or independent car leasing companies. A nontraditional way is to assume someone else's lease. Many people enter into leases that they cannot keep so swapping leases can benefit both you and the other party. Evaluate the financial cost and benefit and search for leases with added incentives, such as a financial bonus for assuming a lease.

How to Make Car Payments While on Short Term Disability

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Short-term disability insurance pays a percentage of your salary if you are unable to work for a short period of time because of illness, injury or pregnancy. Many companies and businesses offer this type of coverage to their employees for a small monthly fee, but you can obtain short-term disability insurance on your own. Short-term disability benefits can help cover your bills while you are temporarily disabled (typically up to six months), which is especially helpful if you have a large debt such as a car note.

Instructions

Speak to the insurance provider about your benefits. You will need to confirm the start date of your monthly benefits, the exact amount of your payments and the length of time your policy will allow you to receive short-term disability benefits.

Contact the auto lender to discuss your options. For instance, the lender may allow you to make partial or interest-only payments until you are financially able to make your regular scheduled payments. The lender may even allow you to defer your car payments for a short period of time. In addition, the lender may give you the option to refinance your current auto loan in order to lower your monthly payments. Please note the lender may require you to provide documentation of your disability in order to qualify for a deferment or new payment plan.

Get the agreement in writing. Once you work out a reasonable payment arrangement with the lender, ask for a confirmation letter. The letter should provide specific details about the arrangement, such as the amount of your monthly car payments and your scheduled due dates while you are temporarily disabled.

Submit your payments to the lender in a timely manner. It is important that you make your payments on time according to the agreement. If you fail to make the required payments by the due dates, the lender may withdraw the payment arrangement and demand payment in full from you. In addition, if you become delinquent on your account, the lender may attempt to repossess your car.

How to Fix Bad Car Loans

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You can get stuck with a bad car loan for several reasons. The most common is having a bad credit history: Lenders might not have been willing to extend credit unless you paid a high interest rate. But you could have gotten bad terms even if you have a good credit score. Either way, you should be able to fix your bad car loan.

Instructions

Check your credit report to make sure it is in the best possible shape, advises Carbuyingtips.com. If you got a bad car loan because of credit problems, you will need to build up a history of on-time payments for at least six months. Even if you had good credit, it's still smart to check your report for any possible mistakes. You are entitled to a free copy from all three bureaus (Equifax, Experian and Transunion) annually. Dispute any mistakes. You can get a free copy of all three reports from www.annualcreditreport.com

Contact the financial institutions where you currently have accounts. A bank or credit union is often more willing to give you a car loan if you have established a long-term business relationship. They are also more likely to give you favorable terms. Carbuyingtips.com says credit unions tend to give the lowest interest rates. Philip Reed of the Edmunds auto research website says you also should search online through sites like Bankrate.com.

Get the exact payoff amount from the current lender once you find a financial institution that agrees to give you a better car loan. Ask how long you have to pay that amount before it goes up. Typically it will be good until your next car payment. Ask if there are any other fees or early payoff penalties. These are often part of a bad car loan; if they are in your contract, you will have to pay them to get free off the loan.

Get a check from your new lender that covers the loan payoff and any fees. Make a copy of it before you send it to the current loan company. Make the payoff in person if possible so you can get an immediate receipt. Otherwise, mail it certified so you can prove it was delivered by the correct date to avoid paying a higher amount.

How to Buy a Car After a Repo

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Auto lenders commonly repossess vehicles when owners stop making their loan payments. Repossessions can follow a job loss, and having the bank reclaim your automobile can hurt your credit score. Losing your car can stop immediate loan approvals. But within time, you can improve your bad credit score and buy another car after a repo.

Instructions

Negotiate with your lender. Lenders will report the repossession, and this notation will reduce your score. Lenders may also report any deficiency balance after re-selling your car (the difference between what you owed and what the car sold for). Make arrangements to pay off this balance to lessen your credit damage after a repossession.

Give yourself enough time to rebuild your credit score. Don't apply for another used or new car loan immediately after the repossession. This results in a much higher interest rate. Allow yourself time to improve your credit score -- perhaps six months or longer. Pay down existing debts and maintain a good payment history with other loans and credit card companies.

Provide an explanation on your personal report. If you lost the vehicle because of a layoff or illness, include a brief statement on your credit report next to the negative item.

Shop around and compare auto loans. Some lenders don't issue loans to people with a recent repossession. Check with local subprime auto lenders and acquire loan quotes. Use a co-signer if needed to help you qualify for another car loan. Ask a relative or friend with a good credit rating to help you obtain a lower rate.

Requirements for Selling a Car

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Situations may arise where you elect to sell a car instead of trading it in for a new model. You may need to raise extra cash, or maybe you just don't need the vehicle any longer. When selling your car privately, there are certain requirements you'll need to meet to facilitate the transaction.

You will need to obtain all paperwork associated with your vehicle, including the title, registration and maintenance and repair documentation. With the increasing demand from buyers who want to see vehicle inspection reports, it also may be necessary to obtain a report from a company such as Carfax. This provides the buyer with information about the vehicle's accident and ownership history.

Before you can sell your vehicle, you need to determine its market value. Resources such as Kelley Blue Book and Auto Trader can help you establish the vehicle's fair market value, which you can use as the basis for your asking price. Knowing your vehicle's true value also can help you in the negotiation process with potential buyers.

In many states, after locating a buyer who agrees to purchase the vehicle, you need to complete a bill of sale. A typical bill of sale includes information such as the names of the buyer and seller, the vehicle identification number, date, make and model and selling price. Be sure to contact your state's Department of Motor Vehicles for state-specific instructions.

When you complete the bill of sale, you need to finalize the deal. In most cases, this will involve transferring the title with the aid of a notary public or equivalent official. Cancel your insurance coverage on the vehicle immediately to prevent any future liability.

If you still owe money on your vehicle, make arrangements with your bank to obtain the title. If feasible, meet the buyer at your bank so he can pay off the loan balance. The bank can then sign the title over to the buyer to complete the sale.

How to Get the Title for a Car in Michigan After It Is Paid Off

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Your car title not only shows ownership but also designates who receives the insurance payment if the vehicle is totaled in an accident. Because of this, it is imperative that you receive the title quickly after you pay off the lien. In Michigan, the lender must notify the secretary of state within 15 days of receiving your final payment. Typically, you should receive your title within 30 days without any effort on your part, but if you do not, you must take steps to ensure that you receive the title from the lender.

Instructions

Inspect your loan documentation; write down the name and contact number for the lender. Make a note of the make, model, year and vehicle identification number of your car. Write down your loan number for future reference.

Write the number and amount of the check you used to pay the balance of your loan. Note the transaction confirmation number if you paid the loan off online.

Call your lender. Explain that you have not received the title after sending the final payment. Give the lender your loan number and the information about your payment method.

Call the Michigan Secretary of State at 888-767-6424 if the lender will not send the title. Provide the office with your lender's contact information, loan information and the vehicle's information. The office will take steps to provide you with the title if you have satisfied your obligation.

What is the Best Way to Repair Your Credit After a Car Repossession?

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If your car has been repossessed for non-payment, your credit score has likely already suffered greatly due to the late payment history. Even worse, once a loan account is labeled as repossessed, your credit score will take an even bigger hit and the item will remain for any prospective lender or employer to see for up to seven years. Fortunately, a credit score can survive repossession and over time, with proper behavior, your credit score can be repaired.

If it is financially possible, make an effort to redeem the repossessed car before it goes to auction. A redeemed repossession looks a lot better than a straight repossession on your credit report. Additionally, when the car is sold at auction, the proceeds may not be enough to pay off the remaining car loan balance and having a delinquent balance, collection item or even a judgment will do further harm to your credit score. Working with the creditor to redeem the car or to negotiate a settlement on any past due amount can lessen the impact of this event on your credit profile.

A repossession presents a strong motivator for you to obtain and review your credit report. You will want to challenge any inaccurate information on your report for the repossessed automobile account as well as any other credit accounts. If you can find any information that is erroneous, you may be able to have that comment removed or the entire negative item deleted from your report. Challenge the date of the late payments, the total available amount of the loan extended and other items that you can challenge factually.

Now that you have seen the damage a repossession can have on your credit score, make every effort to keep all other credit and reporting accounts in good standing. For each month you remain in good standing, the impact of the repossession is lessened and your credit profile slowly starts to rebuild. Additionally, other creditors will see the repossession on your account and may be inclined to close your accounts at their discretion. Ultimately, this is out of your control, but do not make it easier for them to decide by falling behind on other accounts. Your remaining credit accounts are lifelines to rebuild your credit profile.

Obtaining new credit after a repossession is difficult. However, there are many lenders that specialize in high-risk loans and credit lines. Secured credit accounts where you place funds on deposit with the creditor are mechanisms that can be used to rebuild your credit profile. While it is not advised to go out and try to get new credit for the sake of having it, when you need it, be prepared to be treated as a high-risk consumer and make some sacrifices to obtain the new loan. With good payment history on these types of loans, you should be able to move your way back to the bucket of consumers that can obtain credit without such stringent requirements.

How to Sell a Car to a Private Party in South Carolina

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Buying and selling a car between private parties in South Carolina is fairly straightforward. The most difficult part is deciding a fair market price for your vehicle. Once you've found a buyer, it's only a matter of filling out some forms and filing them with the Department of Motor Vehicles to transfer the title. If you not have a title for your car, you will need to get a replacement title before you can sell it.

Instructions

Locate the title to your vehicle. If you do not have a title, you will need to contact the local Department of Motor Vehicles (see Resources) to find out how to get a replacement title. Fill out the top portion on the back of the title.

Create a bill of sale. Although South Carolina only requires a bill of sale for vehicles titled earlier than June 19, 1989, having a bill of sale is good protection for both the buyer and the seller. Make two copies, and have both people sign and date the document.

Remove the license plate from the vehicle. You can turn in the plate to the DMV or you can transfer it to another vehicle. If you are turning it in, you have 45 days to do so or you can face fines.

Give the signed title to the buyer. The buyer will need to file the title with the DMV to complete the transfer. They also have 45 days to do so, but all motor vehicles are required to display a license plate, either permanent or temporary, so it's in their best interest to register the vehicle promptly.

Complete a "Notice of Vehicle Sold" form and file it with the DMV. This lets the DMV know that the vehicle has been sold and is no longer in your possession, in case it is used in a crime or accident before the new owner registers it.

Wheels-for-Work Grants

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Wheels for Work grants provide disadvantaged families and individuals with the resources to obtain a reliable vehicle. State agencies or private organizations offer grants, donations or other financial products so low-income individuals can achieve self-sufficiency. Typically, employed applicants or those seeking gainful employment qualify if their incomes don't exceed a set standard.

Wheels for Work programs seek to provide transportation to people who are attempting to secure and keep gainful employment. The programs operate in many states across the nation and have minimum qualification requirements. Typically, applicants must meet the federal poverty level guidelines in order to qualify.

Several states offer Wheels for Work leasing programs. Each state has differing regulations, but the goals of the program remain the same. Some programs offer a zero-percent-interest car loan to low-income families with poor credit histories. For example, Wisconsin's Work 'n Wheels program offers buyers a zero-percent loan which the buyer must repay in 30 months at no more than $135 per month, as of July 2011.

Several programs, such as Pennsylvania's Wheels of Work program, accept donated vehicles from members of the public. The vehicles are reconditioned and donated to a family or sold to recondition other vehicles. As with most programs, applicants must meet income guidelines, which typically requires income below the federal poverty line.

Other Wheels for Work programs offer repairs to families who own disabled vehicles. Typically, a condition of being awarded a repair is having gainful employment. Applicants must provide proof that they do not have the funds available to repair their vehicle and that the vehicle is essential to maintaining employment.

How to Sell an Automobile & Provide Financing for the Purchaser

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The type of automobile you are selling affects how quickly you locate a buyer, according to Edmonds. However, the Internet makes selling an automobile, regardless of the type, an easier task for owners. Additionally, stating that you are offering owner financing draws more interested buyers. While owner financing attracts buyers with less than perfect credit, this is not an indication that she will abandon the payments. After all, even those with bad credit need a way to travel.

Instructions

Repair any mechanical issues the automobile has. Selling an automobile that is in good, running condition helps ensure the buyer makes payments on time.

Gather the title and other documents for the automobile, such as the registration. Make sure it is titled in your name. Determine the value of the automobile by checking the Kelly Blue Book or NADA (see Resources).

Advertise the automobile for sale. Use the local newspaper, a magazine or Internet advertising. List the information regarding the vehicle in your advertisement along with the statement "Owner Financing Available."

Compose a finance agreement for the automobile. Include your name, the name of the buyer, the vehicle information, such as vehicle identification number, make, model, year and mileage. List the terms in the agreement, like the down payment amount, the payment terms and the delivery of title agreement.

Obtain a copy of the buyer's identification before allowing him to sign the agreement. Make sure he is at least the legal age of consent according to your state's law.

Sign the finance agreement as the seller and have the buyer sign and date the agreement. Use a notary to witness the signatures, have her sign the agreement and attach her notary seal. Provide a copy so the new owner can purchase a tag for the automobile.

How to Buy a High Mileage Car

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In this economy, it is best to save your money where you can and invest wisely. Additionally, it is best to limit your exposure to depreciating assets. This specifically applies to automobile purchases. As soon as you drive a new car off the lot, it looses value. With a used car, especially with a high-mileage used car, this depreciation becomes moot. With the right information, a buyer can purchase a used car at or below its value and continue to drive it with little to no depreciation worries. The longer the car is driven, the more value per dollar spent.

Instructions

Create a budget. Determine how much you want to spend on your car, and start a basic search for cars in that price range in your area. Cars.com and Ebay.com are great starting points. You can also search your local classified ads in the newspaper. Narrow your options by choosing the cars that are most suited to your need.

Take your list of suitable cars and begin to research the type of car. For example, if a Toyota Corolla fits your needs and price range, begin to search for information on how long the average life of the car is in miles. If the mileage on the Corolla that you found is low compared to the average life of the car, you may have found a good deal.Compare the price to the Kelley Blue Book value (kbb.com) and see if it is reasonable for the condition and mileage.

Once you have narrowed your options to two or three, take them out for a test drive. If you like one more than the rest, purchase a CarFax report on it to see if there is any accident history.

Take the car to a local, reputable mechanic to see if there are any obvious needed repairs. If there are, you can either request that the repairs be made before the purchase or ask that the price of the repairs be taken off the price of the car.

Can You Trade in Your Car if it Is Refinanced?

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You can trade in your vehicle even with an unsatisfied refinanced loan. In fact, no difference exists between a refinanced loan or the vehicle's original loan when it comes to trading in. The bank has a lien on the vehicle either way, and the loan must be satisfied by the dealership once the vehicle is traded in.

Just as with a first-time loan, you can check the vehicle's equity against its loan payoff amount to figure if trading is worthwhile. Call your bank to find out your vehicle's payoff amount. Rather than try to figure out how many payments you have left, calling allows the bank to give you the correct amount with a reduction in interest, as you pay interest daily. Have your dealership appraise your car at websites that offer trade-in appraisal guides, such as the Edmunds or Kelley Blue Book websites.

In most cases, your dealership will help you to find a new or used car you want to purchase. If your trade is a concern, let your salesperson know. Most salespeople will explain the process, appraise your vehicle and figure out whether or not you have equity -- or if you are upside down, meaning you owe more than the car is worth -- before moving forward. Upon the trade and new car purchase, the dealer will pay off your loan in full.

If your refinanced loan is brand-new, it could affect a new loan and its interest rate. All banks are different, however; many like to see an established loan in place. If you just took out a loan, it looks as if you were just extended a line of credit. Your dealership will work with different lenders to get you an approval regardless. Or, you can obtain financing on your own through the bank you used for refinancing or another bank of your choosing. You won't be able to determine whether or not your refinanced loan will affect your lending opportunities until you apply.

Before moving forward with another loan, determine why you refinanced in the first place so that you do not put yourself in a similar situation again. For example, if you refinanced because your rate was too high, make sure you are happy with your rate before proceeding. Or, if your payment was too high, ensure you purchase a vehicle within your means this time. Do not make the same mistake twice and proceed with a loan only if you're happy with its term, interest rate and payment.

Buying a Car With No Credit History

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Buying a car without credit history can be as challenging as buying a car with bad credit. Lenders are hesitant to loan money---whether for a home, a vehicle or a credit card---if the consumer does not have a history of showing she has paid her bills in the past. While you may be able to find a lender who is willing to offer credit, it will be an easier process if you can take six months to establish credit prior to attempting to finance a vehicle. If you do not have the time to establish your credit history, there are other choices to obtain financing for your vehicle.

Instructions

Find someone who is willing to be a co-signer on the loan. A co-signer is someone who is willing to take the responsibility for the debt. He will not make the payments for you but in the event you do not pay, he will be held liable for the debt. The co-signer should have good credit.

Review your finances carefully to determine the monthly payment you can afford. Consider the additional costs of insurance as well as the cost of repairs.

Take your co-signer with you to the car dealership or the bank where you wish to obtain financing. He will need to give the lender his personal information to complete the application and show proof of income.

Select a vehicle that is less than the amount the lender is willing to loan you. Consider the extra expense of tags and titles.

Make all payments on time. By making payments on time for a 12-month period, you should be able to refinance the car solely in your name.

Apply for a secured credit card. Check with your local bank or credit union to see if it offers a secured credit card. If not, your goal should be to find a secured card that offers an interest rate lower than 10 percent, has an annual fee of less than $40 and reports to all three credit bureaus.

Send in any deposit required to establish the secured credit card. Your deposit is used as collateral and will be equal to the credit line requested. A small credit line is sufficient for establishing credit.

Make all payments on time for six months. After the sixth payment has been reported to the credit-reporting agency, pull a copy of your credit report and take note of your credit score.

Proceed to your bank or car dealership of your choice to inquire about financing. Inform the lender of your monthly payment range. Bring proof of income.

Find a car dealer that advertises a willingness to loan to people with bad credit. Even though you do not have bad credit, your situation of no credit history is similar.

Prepare to pay a much higher interest on any loan you may receive. Also be prepared to have a down payment. It is unlikely you will be approved for a car loan without a down payment when you do not have good credit.

Visit the financing department of the car dealership. Have proof of income and advise the representative of the maximum payment you can put down. If possible, bring someone with you who has financed a vehicle in the past so you have support.

Make all payments on time and within 12 months, you can refinance the vehicle with a lower interest rate.

What Are Car Buyer Incentives?

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Car manufacturers and car dealers need to keep selling new cars to maintain the production of subsequent models. If the inventory in dealer lots of certain models gets too high, the car manufacturers will offer incentives to make the cars more affordable to buyers. Incentives become especially prevalent when a new model is coming out and models from previous years need to be sold.

Consumer cash or cash rebates are a widely used form of car buying incentive. The car manufacturers offer extra money if a buyer purchases a specific model and year of new car. The term cash incentive is a little misleading because the majority of new car rebates are used to reduce the purchase price of the car. Cash rebates are real savings to a car buyer. The dealer is required to pass consumer rebates along to the customer and cannot take the rebate without informing the buyer the rebate is used in the car purchase.

Another form of car buying incentives is subsidized interest rates on car loans or special lease programs. Low interest car loans can save a car buyer thousands of dollars when compared to regular finance rates. An incentive finance rate can be especially valuable to the buyer who does not have a top tier credit rating and would otherwise not qualify for the best auto financing terms. Subsidized leases are a good deal for the buyer who can meet the requirements and adhere to the mileage restrictions.

Often a car manufacturer will offer a choice of cash rebate or low rate financing. A car buyer should have the dealership calculate the monthly payment with each option and select the plan that yields the lowest payment. Choosing the rebate does lower the loan amount, and starting with a smaller loan will result in a better loan-to-value ratio, or shorten the period of time the car is worth less than the loan balance.

Car buying incentives from the manufacturer should not influence your negotiations with the dealer. Apply the selected incentives after negotiating the best possible price on the car. Cash rebates are not the dealer's money and it does not affect his profit margin on the car. Beware of a purchase offer that shows the car price at the full sticker price less the cash rebates. If the manufacturer is offering significant rebates on a certain model, the dealer is probably over stocked with the same model and should be willing to negotiate an attractive price.

Can You Remove a Co-Signer on a Vehicle?

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It is very unlikely that your lender will allow you to remove a co-signer from your auto loan without applying for a new loan by yourself. Your current loan terms were based on your co-signer's credit and income. Your lender may allow you to refinance your car loan, or you can choose a different loan provider.

Your current loan terms are based on information obtained from your co-signer's credit report. Good-credit borrowers may obtain up 120 percent of a vehicle's value, while someone with poor credit might obtain as little as 60 percent. Your co-signer likely increased this lending percentage, known as a loan-to-value ratio, to decrease down payment requirements. Lenders also consider your co-signer's income, as he is just as responsible for paying back the loan as you are. With little income or high debt, you might not have obtained a loan approval by yourself. For these reasons, removing a co-signer is unlikely, as doing so changes the lender's risk and can result in non-payment.

To find out if you can obtain a loan approval without a co-signer, apply to your own lender to qualify for a loan in your own name. If your loan provider doesn't offer a refinancing option, apply elsewhere for your current loan's payoff amount. Call your lender to obtain the payoff amount and prepare to provide your vehicle's information to a potential lender. Have your vehicle identification number (VIN), mileage, year, make and model ready to provide for your application. You'll also provide your credit, income and employment information. If approved, your new lender will pay off your old loan.

You must have your co-signer's approval to refinance. As the vehicle's titled co-owner, your co-signer doesn't have to agree to release his loan responsibility and ownership. Ask your co-signer if she will sign the title to release her ownership once you obtain a loan on your own. To sign the title, your co-signer might have to go the lender if your state sends vehicle titles to lien holders. If your co-signer has moved out of state, you'll have to wait for her to sign documents and mail them back before you can complete the refinance.

If you obtain a loan approval, consider your overall loan payback amount and budget. If your credit hasn't improved since you initiated your original loan, you might obtain a restricted loan approval because of your lending risk. Interest rates are as high as 29 percent in some states, and a lender can choose to decrease your loan-term options. A high interest rate and shorter loan term can result in a substantially higher car payment. You may want to wait to remove your co-signer if the terms of a refinance are unfavorable.

Can the Residual Value on a Car Lease Be Negotiated When the Lease Is Up?

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Unfortunately, the residual value of a leased car is rarely negotiable. Banks are in the business of making a profit. The residual value is the bank's best estimate of what the car will be worth at the end of the lease term. Accepting an amount lower than the residual value for the car means a loss for the bank.

The residual value is the amount you can buy the car for after the lease term is up. A low residual value equates to higher monthly payments to lease the car. For example, if you leased a $30,000 car whose residual value is estimated at 50 percent of its original price --- or $15,000 --- for 36 months, your monthly payment would be $15,000 divided by 36 months, or $417, excluding interest, tax and fees. Conversely, if the same vehicle's residual value goes up to $20,000, your monthly payment declines to $294, excluding interest, tax and fees.

The best time to negotiate is before you sign for a car lease, particularly if you have intentions of purchasing the car at the end of the lease term. The dealer is more open to negotiating the price of the car upfront; he can then turn around and present this negotiation to the bank that's financing the transaction. You should also know the historical resale value of the car before negotiating with the dealer. You can obtain residual values by referring to the quarterly Black Book, which may be available at your bank's auto loan department. You can also check residual values online by going to the Automotive Lease Guide website.

You need to understand the lease calculation to negotiate the terms when making your offer to the dealer. First you need to know the monthly depreciation rate on the vehicle. To calculate the depreciation, take the difference between the cap cost and residual value. Divide this number by the number of months you plan to lease the car. Next calculate the finance charge by adding the cap cost and residual value and multiplying this by the money factor. The dealer isn't required to disclose the money factor, but you can take an annual percentage rate, or APR, for financing the vehicle and dividing it by 2,400 to get an approximation. The APR is the yearly cost of borrowing, which includes interest rate, the origination fee and other fees. Finally, add the monthly depreciation and monthly finance charge to derive the lease payment.

Read the lease document thoroughly before signing it. Hidden costs can actually have you paying more for the vehicle than what it's actually worth. For example, in an "options" scam, a dealer charges you for car options --- e.g., a high-end stereo --- that aren't in your vehicle, thereby inflating the price of the car. Be aware of all the fees associated with your lease, such as the vehicle acquisition fee. The best way to know what you're paying for is to ask for an itemized lease agreement.

How to Find Auto Financing After Bankruptcy

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Bankruptcy harms your credit, especially if you did it recently. It is possible to obtain an auto loan afterwards, although re-establishing yourself first can help you to obtain a better interest rate. Otherwise, arranging funds for a down payment and applying to the right lenders can help you to obtain an auto loan after bankruptcy.

The vehicle's value, the amount you wish to borrow and your overall credit history and score determine the percentage of your loan-to-value ratio. Good to excellent credit customers may borrow as much as 120 percent of a vehicle's value, whereas poor credit consumers may obtain as low as a 60 percent loan-to-value ratio. For this reason, you may have to put money down toward your loan. The ratio is determined by the lender you apply to, as banks have different lending criteria and approval guidelines.

Save money for a down payment or determine how much you can reasonably afford to put down with the funds you have. Also, use an auto loan calculator to determine your monthly payment, which helps you to shop within your means. If your interest rate ends up being high because of scarred credit, you can gauge your borrowing limits. Knowing your price limits can prevent you from pursing a vehicle out of your price range because of desperation or lack of budgeting.

It may prove worthwhile to work with a large dealership for a loan, as many work with various lenders. Your salesperson can send in your credit application to different banks for what is known as a "payment call," which is asking the bank to determine if it would extend a loan to you. The bank will send back terms and conditions of loan approval for your consideration. Or, you can apply to a lender of your choosing. It may be best to apply to a bank whose loan you did not include in your bankruptcy. If you kept a car or motorcycle loan and paid it off despite the bankruptcy, the lender may decide to extend you a loan again.

If you cannot obtain traditional financing, you can apply to a subprime lender, which is a bank that specializes in high-risk loans. Subprime lenders require money down and offer extremely high interest rates. While this kind of loan may ultimately become your only lending option, be sure to consider your budget and how much you can put down. The payments for a subprime loan are often very high because of interest rates that are more than 20 percent.

How to Calculate How Much Mileage Is Left on a Lease

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When you lease a car, the lease will include a certain number of miles per year included in the lease. If you exceed the total mileage allowed in the lease, you will have to pay over-mileage charges. The knowledge of how many miles you have remaining on your lease can help you avoid a large over-mileage charge when the lease ends.

Instructions

Find the "Federal Consumer Leasing Act Disclosures" form in the paperwork you received when first leasing the car.

Write down the following items from the leasing disclosure form: The number of monthly payments is in a box at the top of the form. Total number of payments consist of the first payment plus the number of remaining payments. The annual mileage allowance is near the bottom of the form in the "Excessive Wear and Use" paragraph. Typical mileage allowances are 10,000, 12,000 or 15,000 miles.

Multiply the annual mileage allowance times the number of years on the lease contract. If you have an odd number of payments such as 39 or 42, divide the annual mileage allowance by 12 and multiply it by the number of payments. The result is your total lease mileage allowance. For example, if you have a four-year lease allowing 15,000 miles per year, you'd multiply four by 15,000 to get total lease mileage of 60,000. Using the monthly method, 15,000 annual miles divided by 12 is 1,250 miles per month.

Subtract the current car mileage from the calculated lease mileage allowance. The result is the remaining miles you have on your lease. For example, if your current odometer reading is 48,500 miles, subtracting this amount from the 60,000 contract miles leaves 11,500 miles left on the lease.

What Do You Do When Your Stolen Vehicle Is Recovered After Insurance Has Paid It Off?

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If your car is stolen and your insurance company pays you for the loss, you are no longer the car's owner. As a condition for paying you for the car the insurance company typically requires that you sign the car title over to the company. However, each insurance company is different and has different policies so ask your insurance company if you have a specific question about policy details.

If your car is stolen and you have comprehensive auto insurance, your insurance company will typically reimburse you for the stolen vehicle. When the company does this and for how much depends on the terms of your insurance agreement. In general, your insurance company will reimburse you for the fair market value of the car. However, insurance companies typically delay payment for at least 30 days to give law enforcement a chance to recover the stolen vehicle, according to CompuQuotes.

Once your car has been stolen and you've filed a claim with your insurance carrier and they've agreed to pay, you typically no longer own the car. If you file a claim with your insurance company for a stolen car, the company will typically require you to sign ownership of the car over to the company before it reimburses you for the loss. Once you take the money and sign over the car to the insurance company, you no longer have an ownership interest in the vehicle.

If your insurance company has already paid you for a stolen car and the car is later recovered, there is not much you can do. The company is now the legal owner of the car. You may be able to purchase the car back from the insurance company, but the company generally does not have to return it to you. You can talk to your insurance company and ask if you can buy the car back for the same amount as the company paid you for the loss, though this may not always be possible.

Auto insurance policies can differ significantly. It's always best to review the terms of your insurance before entering into an agreement with your insurance carrier. If you have questions about what happens in the case of your car getting stolen, make sure you review any stolen vehicle clauses and talk to your insurance company about the procedures you have to go through if this happens.

Definition of a Bad Credit Car Loan

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Regardless of credit, many people require a car for work. Car loans can be confusing and calculating interest rates and payments can seem daunting, even for people with perfect credit scores. For those with less-than-perfect credit, the only option is sometimes known as a bad credit car loan. These loans are offered to buyers with several stipulations attached, as well as several fees. The following provides information about bad credit car loan services.

Most bad credit car loans will come with a high interest rate. Depending on a buyer's credit, rates can vary from 9 to 21 percent annually. This extreme rate differential can be cumbersome on car payments, as the vehicle depreciates, no real equity is paid off on the car until the end of the loan. Rates such as these can mean paying only pennies on the principal balance each month, and are connected directly with how much of a risk the lender deems the buyer to be.

Bad credit car loans typically come with high down payment requirements as well. While most car loans can be obtained with nothing out of pocket for qualified buyers, bad credit car loans often require down payments of $2,500 or more. The down payment is calculated on a percentage of the sales price of the vehicle. The higher the price of the car, the higher the down payment.

Debt-to-income ratios play a big part in any loan. If a consumer's debt load is low, and bills are paid on time, she can typically be approved for a car loan without any major issues. In a bad credit car loan scenario, however, the lender often sets a limit on the loan as well as some other stipulations about the vehicle to protect its interest in the collateral. The limit that the lender sets can also directly impact the percentage of the down payment needed to purchase the vehicle.

Because bad credit car loans come at a high risk of default, the lender will provide for certain stipulations in regards to the year, make and model of the car. Lenders often do not want a car to be more than two years old, and require low mileage on the vehicle upon loan approval. The reasoning for this is because bad credit car loans come with a high risk of repossession, and the lender wants to secure an interest in the vehicle being resold for a profit. Newer vehicles have a higher resale value, so that must be taken into consideration when applying for a bad credit car loan.

Being in a situation where a bad credit car loan is a must can be a difficult one when taking into account how much money you will lose in high interest charges. It is wise to either have a high down payment or solicit a co-borrower who has good credit. This will help keep your interest rate lower for the term of the loan. If this is not possible, however, try to refinance the vehicle after owning it and making timely payments for at least 12 to 24 months. This can reduce interest and balance the equation of the loan in your favor.

Bad credit car loans are normally accompanied by fast-talking car salesmen. Don't get roped into a deal on the first vehicle you find. Make sure you order a vehicle report on every used car to protect yourself against buying a "lemon." Also review the loan terms carefully from the finance department at the dealership, and make sure you are not on an accelerated payment or balloon payment car loan, where high payments are due at the end of the term.

Before visiting a dealership for a purchase, obtain a car loan from an outside lender. This will allow for you to have your financing completed and provide you with more buying power. Having a check in hand when walking into a car dealership takes the mystery out of how much you can spend, monthly payments and high-pressure sales people. Bad credit car loans can be found online or at your local bank or credit union.

What Do I Do With My Title, Tags, and Insurance After My Car Was Repossessed?

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Once your car loan lender repossesses your vehicle for nonpayment, it no longer belongs to you. What you do with your title depends on your state laws. Since the car is no longer in your possession, you need to call your insurance company to cancel your insurance on the vehicle.

Immediately after your creditor repossesses your car, you can contact it to discuss your options for getting the car back. Generally, this requires either paying off the loan in full or making your past due payments plus repossession fees. If this is not an option, the lender will begin making arrangements to sell the car at a public auction. Once it auctions off the car, it will apply any proceeds from the sale to the outstanding balance on your loan. If there is still a balance on the loan after the lender applies the sale proceeds, you will be responsible for paying that amount back to your lender.

If you do not plan to get your car back after repossession, call your insurance company to discuss canceling your insurance. Depending on your insurance policy and terms, you may have to pay a cancellation rate. Cancellation rates differ by insurance company. For instance, you have a 12-month insurance policy that costs $800 per year that you paid in full in January. You car is repossessed in June and you cancel your insurance. Your insurance company will apply its specific cancellation fee to your refund and send you the remaining amount.

The tag on your license plate and your vehicle registration are connected. In some states, the repossession company informs you where to pick up plates and your personal belongings that were inside the car at the time of repossession. The plates and tags remain with you. Depending on your state laws, you may surrender your plates to your state's Department of Motor Vehicles (DMV) to cancel your registration. In other states, you may go to your local DMV and fill out an affidavit attesting to your vehicle repossession, and the DMV cancels your registration. Another option is to allow the registration to expire. In states where the plates remain in the possession of the creditor, the creditor must sign an affidavit regarding the repossession. Doing so cancels your registration and tags with the vehicle.

When you have a car loan, the lender is listed on your title as a secured lien holder. Once the lender repossesses your car, it must remove your name from the title before it can sell your vehicle at auction. Depending on your state laws, the lender must complete an Affidavit of Repossession with the DMV as well as a notarized copy of your original loan agreement and a copy of the final demand letter sent to you after repossession with the postal receipt as proof that it sent and you received the letter. A final demand letter is an official notice giving you one last chance to get your vehicle back and notifying you of the legal actions your lender plans to take regarding the repossession.

How to Make a Payment in DriveTime

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DriveTime is a nationwide dealership, offering thousands of vehicles for sale to accommodate the taste and budgets of customers all over the U.S. Many customers finance their vehicles through DriveTime. To assist customers in making their payments, DriveTime has a number of ways in which it will accept payment. Most payment options charge a fee ranging from a little over a dollar to almost $13, but a few options are free.

Instructions

Set up automatic deductions with DriveTime. DriveTime will deduct your monthly payment directly from your bank account. To set up this option, you must have your account and routing number. There is no fee to pay through automatic deductions. Call DriveTime at 1-888-418-1212 to set up payment. If you are in the military, you can set up auto deductions through Allotment (see Resources). There is no fee for this service.

Send your DriveTime payment by mail. Mailed payments must be in the form of a check or money order. There is no fee charged for mailed payments.

Mail payments to:

DriveTime

PO Box 53087

Phoenix, AZ 85702-3087

Pay your DriveTime bill in cash. To pay with cash, you must go to a CheckFreePay location (see Resource). There is a $1.50 to $1.88 fee (as of 2010) to pay in cash.

Submit your DriveTime payment online. BillMatrix processes payments for DriveTime (see Resources). Payment must be made with a debit card, credit card or check. There is a $5.50 fee to submit payments online.

Call DriveTime to make your payment by phone at 1-877-432-9420. Payment must be made with a debit card, credit card or electronic check. There is a fee of $5.50 to process your payment by phone.

Send your payment to DriveTime with MoneyGram. Payments can be made at a MoneyGram location. The DriveTime receive code is "2049." All payments must be made in cash. There is a $7.55 to $7.95 fee (as of 2010) to submit payments this way.

Send your payment to DriveTime with Western Union. You can send payment in person using either cash or credit card. Western Union's code city for DriveTime is "DTCREDIT.AZ." There is a $12.99 fee (as of 2010).

Assignment and Transfer of a Vehicle Lien

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When you take out a vehicle loan, your loan holder assigns a lien to your vehicle title. A lien is a legal right to the title; you cannot sell or dispose of the vehicle without the lien holder's permission, and if the vehicle is destroyed in an accident, your lien holder receives the insurance settlement. In some cases, you can transfer the lien to a new owner if you sell the vehicle.

If you want to sell a vehicle you currently make payments on, you usually have to obtain written permission from the lien holder. In some cases, the lien holder may require you to use the profits from the sale to pay off your vehicle loan. However, if the lien holder agrees in writing, transfer the lien to the new owner by filling out a form.

State laws vary regarding the assignment and transfer of vehicle liens. In some states, such as Kansas, add blood relatives to the title as long as you remain on the title as well. Other states require you to apply for a transfer of paper title regardless of the circumstances of the transfer. States also charge varying fees for transferring a lien to a new owner.

When a debtor defaults on his vehicle loan, the lien holder has the right to repossess the vehicle and resell it. After resale, the lien holder reassigns the title to the new owner. Depending on state law, the lien holder may have to provide notice to the original owner of the sale and of any right to redemption of the original debt to which the debtor is entitled.

If a debtor attempts to sell a vehicle without telling the buyer a lien exists on the vehicle or obtaining written permission from the lien holder to transfer the lien, most states consider the title transfer fraudulent. Debtors who do this may face criminal charges for fraud. In some states, the seller may not be guilty of fraud if he repays the balance of his vehicle loan within 30 days of making the transfer, even if he does not inform the buyer of the transfer at the time of sale.

Why Do Banks Sell Your Car Loan to Other Banks?

11:36 PM 2 comments

The process of buying a new car is complicated by all of the variables involved, including the make and model of the car, the price you pay and the warranty. Financing your purchase only adds to the confusion. Buyers can have any number of misconceptions about how auto loans work, and what happens to them once issued.

When you finance a new car, you may handle all of your negotiations, including arranging a financing deal, through the dealer. However, dealers do not finance vehicles themselves. Instead, dealers receive cash for the full purchase price, and a bank steps in to loan you the money. This is why when you start making payments on your car, you send your checks to a bank rather than the dealer. The dealer uses the money to buy more cars to sell, and the bank collects interest on each of your payments.

In some cases your bank will choose to sell your loan to another bank, which will continue collecting interest. You may see very little change other than a notification from the lender or a new address on the envelopes you submit your payments in. Banks sell their loans to other banks to collect cash that they can use to make more loans to new borrowers. Banks charge one another fees for these sales, allowing the first bank that held your loan to still profit from it but without waiting for you to pay off your loan in full over the course of several more years.

Another reason that your bank may sell your auto loan to another bank is to eliminate the risk that your loan represents. Even though your lender examined your credit score and verified your income before agreeing to make the loan, there is still a possibility that you'll become unable to make your payments. By selling the loan for an upfront cash payment, the lender passes the risk on and guarantees a return on its investment. Meanwhile the bank that buys the loan can usually earn more by holding your loan and waiting for interest to arrive over time, assuming that you pay off your car on schedule.

Your loan can pass through the hands of any number of banks before it's paid off. In some cases, banks that hold loans such as auto loans bundle many loans together into securities and sell them into secondary markets. This allows investors, including banks, businesses and private individuals, to own a piece of your loan. You continue paying interest to the bank, but the bank uses this money to pay the owners of the loan-backed securities. Selling loans through secondary markets has the same benefits for your lender as getting cash up front and reducing risk.

Why Do I Need a Deposit When Leasing an Auto?

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When you lease a car, you agree to make monthly payments for a set period of time, after which you'll have the option of returning the car to the dealer. Leases allow you to drive a new car every few years, but they also subject you to fees and costs that aren't present when you buy a car. One such fee is a security deposit, which some dealers ask for in addition to your standard down payment.

One of the reasons auto dealers require you to pay a security deposit when you lease a vehicle is to cover any damage that the vehicle sustains while you drive it. Your auto insurance will pay for major accident damage and the lease allows for normal wear and tear that is not a result of your negligence, but other forms of damage may reduce the value of the car and make you liable for a damage fee when you return the vehicle. To eliminate the chance of you not being able to pay for damage, dealers ask for a deposit up front and use it to pay for repairs, cleaning or depreciation.

Mileage fees are similar to the damage fees auto dealers charge on a lease. Just as the dealer expects a certain amount of wear and tear, with you responsible for the excess, your lease includes a set number of miles you can drive before your lease ends. If you exceed this limit, which is often around 12,000 or 14,000 miles per year, the dealer will charge you a mileage fee at a fixed rate per mile. These fees can add up to large amounts, and your security deposit serves as a guarantee that you'll be able to pay for any overage.

Not all auto dealers require security deposits for leases, but those that do may use your credit history to determine whether or not you'll need to pay one. If you have poor credit, the dealer may ask for a security deposit because you pose more of a risk, both in terms of being able to make your monthly payments and being able to pay the fees associated with returning the vehicle. In other cases, regardless of your credit score, the dealer may ask you to pay a higher security deposit to gain access to a reduced financing rate. Paying less interest will save you money in the long term, so even if the security deposit is optional, you should consider paying it.

You stand to receive your deposit back when your lease reaches its end. If you decide to terminate the lease and walk away from the vehicle, the dealer will deduct any charges from the deposit, reducing the amount you get back. The dealer may also charge a disposition fee, which covers the cost of selling the vehicle that you turn in. All of these fees, if your dealer charges them, will be listed in your lease agreement. The security deposit you get back will be the full amount you paid minus any such fees. If you decide to purchase the vehicle, the dealer may subtract the security deposit from the payoff amount that you need to own the car outright.

How to End a GMAC Lease

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GMAC is a lending institution that offers individuals who want to lease a vehicle the necessary financing to do so. The lease term may vary, but at the end of the designated lease period, you will have to make some important decisions about how you want to end your lease. In addition, you should be aware of the condition the car is in before you return it, or you may end up paying additional charges.

Instructions

Determine your excess mileage charges. Your lease agreement will state the number of miles you can drive over the course of the lease without getting charged. The agreement will also state a charge rate for every mile that goes over that. For example, if your lease stated that you could travel 10,000 miles over the course of the three-year lease, but you traveled 12,050 miles, you would have to pay for the extra 2,050 miles when you return the vehicle. If the charge rate was 25 cents for each mile, you are looking at paying a fee of $512.50.

Review the Excess Wear Table in your lease agreement to determine if the car you leased has suffered more than a normal amount of wear. If it has, you will be required to pay the excess wear charges. You can have the car repaired yourself before you turn it in at the end of your lease. This option may be cheaper than allowing GM to create its own excess wear invoice.

Make an appointment with your GM dealer/retailer to complete the end of your lease and turn in the vehicle. Gather together your SmartLease agreement, documents you were issued at the lease's inspection, car keys, keyless remotes and all other equipment that came with the car when you leased it. You will need to bring these to your appointment.

Complete an Odometer Statement when you get to the dealership. This will record the mileage on the car when you leased it, and the mileage on the vehicle when you pulled in the parking lot to return it. You can then sign any final documents the retailer has for you to complete the end of your lease.

Arrange for GMAC financing with the retailer if you wish to purchase the car you leased. If you purchase the vehicle, you will not be held responsible for any excess wear and tear and additional mileage charges.

What Happens With an Auto Repossession?

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Repossession is a process that auto lending agencies take to recover their assets when a car buyer defaults on an auto loan. In a repossession, the lending agency hires someone to forcibly remove and impound the automobile.

According to the Federal Trade Commission, in many states, lending agencies have the right to seize a vehicle as soon as the borrower defaults on the loan by missing a payment or paying late.

After the borrower defaults, the lending agency or creditor send out trained repossessors to seize the vehicle. Although it is legal for repossessors to "break in" to a seized vehicle, they may not damage the car or otherwise "breach the peace," according to the FTC.

If there is any personal property in the vehicle, it must be promptly returned to the borrower. Creditors are not allowed to keep or sell personal property.

After seizing the vehicle, the lending agency may decide to sell the vehicle at auction or retain it as satisfaction of the debt. The borrower may be entitled to redeem his vehicle by paying the amount owed, according to the FTC.

According to the FTC, a deficiency is the difference between the auction sale price or value of the car and how much the borrower owes. The creditor may sue for the deficiency.

What Does a Charge Off Mean on a Car Loan?

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A car loan is a secured installment account. A financial institution gives you money to purchase a vehicle. The car then acts as repayment collateral. You get a clean title to the vehicle once you pay the loan in full, or the bank takes it if you stop making the agreed-upon payments. Often a balance remains on the loan after the bank sells the repossessed car, and that money may be charged off.

A charge off is an accounting procedure by creditors when they deem a loan balance to be uncollectable. This action does not erase your repayment obligation unless a financial institution specifically cancels or forgives the bill, according to the Comptroller of the Currency Administrator of National Banks. The creditor gets tax benefits for charge offs. It can continue its own collection efforts or sell your bill to a debt collector.

Lenders can seize your car as soon as you default on your loan. The definition of default is spelled out in your contract, but the Federal Trade Commission explains that it usually means skipping a scheduled payment. Most states allow vehicle repossession at any time, even if it is on private property, as long as the repossessors do not threaten you, damage your property or use physical force. The bank then sells your car, which leaves an owed balance on your loan if the selling price is less than what you owe. You are legally liable for that amount, but your lender may charge it off if you refuse to pay it.

A charge off of your remaining balance, along with a repossession, is detrimental to your credit rating. Both of this items fall under your payment history when figured into your credit score, the MyFICO scoring information website advises. That history makes up 35 percent of the score, so it takes a big hit. Your missed payments before vehicle seizure and the charge off also figure into your score. The charge off and related negative information is reported by the Equifax, Experian and TransUnion credit bureaus for seven years, hampering your ability to get more another car loan or other types of credit.

Collection agencies profit by buying car loan charge offs and other debt for less than face value, then collecting as much as possible on the accounts. Debt collectors can sue you for the charged off amount in many states until the statute of limitations run out. Statutes vary widely in different states. MSN Money writer Liz Pulliam Weston explains that the collection time frame can be as little as two years or as long as 15 years. The collector can still demand payment after that time runs out but cannot sue you for the money.

The Best Online Motorcycle Loan Financing Options

2:29 AM 1 comment

Pursuing a motorcycle loan is similar to pursuing a vehicle loan; you can find competitive rates and submit an application online for most lenders. Motorcycle manufacturers may offer low-rate financing for a motorcycle purchase, so shop around to find which lenders offer the best financing before you apply.

If you're purchasing a new motorcycle, pursue financing with the motorcycle's manufacturer if it allows. Often, manufacturers offer aggressive rates that can't be beat by other lenders. If you're interested in a new motorcycle, visit the manufacturer's website and find out if special rates exist. Many manufacturer websites offer an online application process, but be sure to read over the application requirements and details. Some manufacturers may direct your application a motorcycle dealer, while others offer instant approvals.

Check the websites of banks in your area, especially credit unions. Credit unions offer low rates and motorcycle specific financing. Rates are often advertised online, although restrictions might apply to older motorcycles or motorcycles with high mileage. Call a bank for clarification if you need to. Compare rates of available lenders and fill out an application once you've found a decent rate. You can fill out the application online, in person or on the phone. Have your motorcycle information ready, such as its year, make, model, mileage and identification number.

Rather than search online for a direct motorcycle lender, you can apply at the dealership you want to purchase from. Many dealers also offer an online finance application process. To submit your application, go to the dealer website and locate its financing options and application form. Your application will not be submitted directly to a lender, it goes to the motorcycle dealer's finance department for consideration. Motorcycle dealers use a variety of national and local lenders, including the manufacturer's bank, if applicable. The dealer will send your application to various banks.

An Internet search for "motorcycle loans" offers thousands of lending options. Fully investigate any lender or website before you offer your credit information. Check with the Better Business Bureau website to determine whether the bank or business you found is reputable. Expect to submit your social security number, date of birth, address, phone number and employment information with your application. Make sure your information doesn't get into the wrong hands. Also ensure that rates are competitive with other lenders. Some banks or loan companies may forward your application to numerous banks, which can cause multiple credit report checks and unwanted phone calls.

How to Remove a Cosigner From a Reaffirmed Auto Loan

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Removing a cosigner from a loan is not possible. Your lender used your cosigner's credit to set your interest rate, loan term and down payment amount. For this reason, you must reapply to your lender or another loan provider for a refinance to remove your cosigner. Your interest rate and term might change, or you might need a down payment to create equity in the vehicle. You also need your cosigner's authorization to refinance your loan.

Instructions

Talk to your cosigner before you contact a lender to refinace your car loan. Obtain his approval for the loan transfer, as he is also a partial owner of the car. If your cosigner does not agree to release ownership, you can't refinance your loan.

Call or arrive in person to speak to your lender about your intentions. Supply your lender with your credit information, which you must resubmit to obtain a loan approval. Discuss your loan options with a lending representative before submitting your application.

Wait for your approval notification, which can take up to one week. Discuss the final approval terms of your loan, such as term, interest rate, fees and whether the lender requires a down payment. Ask your lender which paperwork your cosigner needs to complete to release her portion of ownership.

Explain the ownership release process to your cosigner. If your lender is local, the cosigner can likely arrive in person to sign paperwork. If the lender is not local, your cosigner needs to sign various forms, have them notarized and returned to the lender promptly.

Sign your new loan paperwork, which usually involves motor vehicle documents and contracts. Keep a copy of all your paperwork for future reference.

Can I Get an Auto Loan for a Private Sale If That Car Is Not Paid Off?

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Purchasing a car from a dealership can mean higher sticker prices. With private owners, you can generally negotiate lower prices when the seller is finished making payments on the car. However, some car owners sell their cars before they are finished paying off the balance of the car loan. Before you can obtain the title of the car, the outstanding balance on the car loan must be paid in full.

The balance on the owner's loan is not transferable. When you seek to purchase the car, be sure you understand the terms of payoff for the car. You may incur additional fees, for example, if the car loan has a prepayment penalty. When the seller realizes he is responsible for additional costs, your purchase price can be raised.

You can obtain a loan for a car with a balance on the loan. Once your lender approves you for a loan, you receive a cashier's check in the amount of the purchase price with the owner's name on the check. The check can also be made out to the seller's lender. The seller should give you the payment information before you seek a loan from your lender. Incorrect information on the cashier's check can result in delays in your transaction. If you are buying from a stranger, ask your lender to make the check directly to the lender.

Send the check to the lender through certified mail. Be sure the seller provides a receipt for the paid in full balance once the lender accepts the final payment. Since the seller does not own the car outright, getting the title is not an overnight process. "Transferring the title information when the seller has a lien on the car could take anywhere from two to four weeks or longer," explains Bankrate.

Obtaining a car loan is more than simply completing an application. Even with small loans, lenders take your credit history, income, employment and down payment into consideration. You may offer the seller a percentage of the payment in advance to offset the purchase price. Banks prefer that borrowers offer money toward the purchase price in addition to a loan. In many states, proof of insurance is also required to get a car loan. Bring a copy of your insurance card to verify your insurance coverage.

Before getting a loan to pay off the full balance of an existing car loan, be sure the car is worth the effort. Have a mechanic check out the car before you seek approval through a lender. Research the Kelley Blue Book value of the car online to determine the value of the car in its current condition. Not all cars depreciate at the same rate. If the car is worth more than the balance of the loan, it may be a good buy. If the Blue Book value of the car is worth less than the amount of the loan, the car is overpriced.

Is a Car Loan Considered a Secured Loan?

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Lenders secure car loans by using the vehicles as collateral. The lender has the right to repossess the car if the borrower defaults on the loan. Some people use unsecured personal loans to buy cars, but if a borrower of a personal loan defaults, the lender has no ownership rights to the car.

Prior to securing a lien against a car, the lender must determine the worth of the vehicle used as collateral. Generally, lenders use car values listed in the Kelley Blue Book. KBB shows prices for cars based on make, model, age, condition and local market price. Some car dealers attempt to sell cars for prices far above of the true value, but lenders base loan approval on the value of the car, not the sale price. Lenders typically do not write loans for amounts in excess of the car's value.

When you take out a car loan, the lender places a lien on the vehicle. The lender files the lien at the local courthouse or department of motor vehicles, and it stays on file until you fully pay it off. After the lender receives your last loan payment, he releases the lien. This usually involves a bank employee signing the car title to show that you paid off the loan. At that point, you gain full ownership.

Cars lose value over time. To prevent owners from reaching a point where the loan balance exceeds the car's value, most lenders limit car loan terms to five or six years. However, even within a few years a car's value can drop rapidly. If the owner crashes the car, the insurance company only covers the cost of loan. This means the borrower pays the difference between the loan amount and the car's value. Some lenders require borrowers to obtain gap insurance, which covers the difference between a car's value and the outstanding loan amount.

A lender can repossess a car if a borrower defaults on the loan. But since cars are mobile, they are much harder to repossess than homes. To reduce the risk associated with car loans, most lenders only write them for people with credit scores above 640. Additionally, borrowers must have sufficient verifiable income to make the monthly payments and still have funds to cover their other debts.

How to Get a GMAC Lien Released

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GMAC is a financial institution that provides automobile loans to individuals buying new or used cars. If you choose to take out a loan to buy the car, rather than buying it outright, GMAC will place a lien on the car's title. The loan is the amount of money you must pay GMAC back for the purchase of the car, while the lien is the legal claim GMAC has on the car you purchased. The lien can be removed only when the loan is paid in full. Once the lien has been paid, GMAC will issue a lien release.

Instructions

Call GMAC's customer care line at 800-200-4622 and request a payoff amount. This is the amount you must pay in order to get your lien released.

Pay the full amount owed. You can pay in installments, but you won't get the lien released until the entire balance has been paid.

Call GMAC's customer care line again and provide them with your car's make, model, year, VIN number, state of the title and your name as it is written on the title. GMAC will verify that you have paid your debt and will then issue a lien release. Wait 10 days after the payoff was made for GMAC to mail you the lien release.

Take your lien release document, along with your current vehicle title, to your local Motor Vehicle Agency. They will examine your documents and have you complete a short form. In Texas the form is called "Application for Texas Certificate of Title," but each state has its own form. A new title with the lien removed will then be issued.

Is It Cheaper to Buy a Car at 0% Financing or to Get a Cash Back Offer?

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When deciding between a zero percent interest rate offer or a cash-back offer, also known as a rebate, consider your total loan payback amount and monthly payment to determine the cheapest approach to car ownership. Several loan factors can affect your overall savings, such as a trade-in, down payment amount, loan term and approved interest rate.

The difference between your monthly loan payment and your overall loan payback amount depends on the amount you finance, your interest rate and the loan term you choose. If you were to pursue a loan with little money down for a 60-month term or longer, the cash incentive savings are likely to prove similar to the alternative zero percent savings. If you decrease your loan amount by a down payment or trade-in, or intend to pay off your loan early, choosing the cash incentive is likely your cheapest option.

You may find that your monthly payment is too high if you choose to pursue the zero percent offer. A zero percent interest rate option usually involves term restrictions. For example, you may find the zero percent opportunity is only available for a term of 36 months. While it may seem like a great deal, a car payment for 36 months without a sizable down payment is much higher than you'd expect. An $18,000 loan financed for 36 months at zero percent costs $500 per month. An $18,000 vehicle with a $1,500 rebate that's financed for 60 months at 5.9 percent is only $318 per month. You may have to choose the cash incentive to comfortably afford your monthly loan payment.

The best way to determine the cheapest route based on your budget, term, trade-in and down payment is to use an auto loan calculator. Edmunds.com offers one that figures sales tax and dealer fees based on your specific location (where you live can add thousands to your loan amount) Use the calculator to view the monthly payment differences between either of your options. Also, consider your long-term costs by reviewing your overall loan payback amount. Many auto loan providers do not penalize for an early loan payoff, so you may have the opportunity to avoid some of your interest payments if you intend to pay off your loan early.

Not everyone will qualify for a zero percent loan offer. You must use the manufacturer's bank and have good-to-excellent credit to obtain a loan approval. You may prequalify for the loan before going to the dealer by applying at the manufacturer's website or by calling a dealer to submit a credit application for a preapproval. If your loan is declined, you can use a co-signer to obtain your zero percent loan. Or, you may have to pursue the cash incentive and accept a higher interest rate.

Auto Financing Questions

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Buying a new car can be an exciting experience, but when it comes to financing it, many people are confused. If you are financing a new car, you need to make sure that you understand the terms of the agreement. Asking the right questions can go a long way towards making things clear.

When you are getting an auto loan, you need to ask exactly how long the term of the loan is. Dealers will often try to play with the term of the loan to get you a payment that you can afford. If they hear you talk about a payment that you want to try to get, they may extend the term so that your payment can be more affordable. Ideally, you should look for a shorter term, such as four or five years.

During this process, you should also find out exactly how much money you are paying so that you can finance the purchase of your car. Ask the lender what the exact annual percentage rate is on your loan. Then ask what the total cost of the financing is for the life of the loan. You will most likely spend thousands of dollars over the course of your loan on finance charges and you need to understand the total amount upfront.

When you work with a dealer, you will usually obtain financing from an outside source with the help of the dealer's finance department. The dealer may go ahead and give you the car and finalize the paperwork without actually having a deal in place. Then, after you have a car, they may call you and tell you that they could not get you financed. Before you leave with the car, find out exactly who the lender is and whether it is a final sale.

When buying a new car, it is generally a good idea to purchase gap insurance as well. This is a type of insurance coverage that covers the gap between what you owe and what the car is worth if you are in an accident. This could be a considerable difference because cars depreciate quickly. Gap insurance is offered by the lender and it will usually only be a few extra dollars per month added to your payment.

Monday, April 29, 2013

Identification

Refinancing

Personal Loan

Alternative

Credit Score

Loan Term

Down Payment

Co-signers

Charges of Driving With a Suspended License

Non-Substance-Related Suspension

Substance-Related Suspension

Causes for Suspension

No Credit Check

Financing Costs

No Auto Loan Payment

Upside Down Loan

Sunday, April 28, 2013

Basics

Dealer

Preapproval

Instructions

Saturday, April 27, 2013

Instructions

Friday, April 26, 2013

Instructions

Wednesday, April 24, 2013

Obtaining Paperwork

Determining Price

Bill of Sale

Finalizing the Deal

Notifying the Bank

Instructions

Monday, April 22, 2013

Redeem the Repossession

Dispute Erroneous Items

Manage Other Accounts Responsibly

Establish New Credit

Instructions

Purpose

Leasing

Donations

Repairs

Sunday, April 21, 2013

Instructions

Instructions

Saturday, April 20, 2013

Value and Payoff

Dealership Process

Considerations

Precautions

Instructions

Have a Co-Signer

Establish Credit First

No Credit or Bad Credit Lender

Friday, April 19, 2013

Consumer Cash

Finance Incentives

Cash or Finance Rate

Price Negotiating

Loan Terms

Refinance Process

Co-Signer Approval

Refinance Considerations

Residual Value

Negotiating Upfront

Calculating Lease Payments

Hidden Costs

Loan-to-Value Ratio

Budgeting

Applying for a Loan

Subprime Financing

Thursday, April 18, 2013

Instructions

Wednesday, April 17, 2013

Stolen Car

Claim

Recovery

Terms

Interest Rate